Analysis of joint products. GFA has three products that are produced from a
joint process. You need to analyze whether the current products that are made
are the most profitable decision for GFA, or whether changes should be made to
increase profitability.
In the output at the splitoff point was kilograms of GreenBoost. Each
kilogram of GreenBoost retails for $ per kilogram.
The joint costs of processing the compost in was $ GFA used
kilograms of the GreenBoost to create OrganicHarvest, and kilograms to create
BioGrow. There is a loss of volume when creating the BioGrow product, and a
loss of volume when creating OrganicHarvest.
The following table outlines the process:
David is unsure whether he should continue to produce the three products, or whether it
would be more beneficial to focus just on the GreenBoost product. Right now, David is
tracking profitability using the following format:
